London/Dubai — Most OPEC+ oil-producing countries oppose plans to increase output from February as winter lockdowns to contain the coronavirus choke demand, three OPEC+ sources told Reuters on Monday.
OPEC+, which groups OPEC and other producers including Russia, meet on Monday, a day after OPEC Secretary General Mohammed Barkindo warned OPEC+ experts of downside risks facing the oil market.
The online meeting of OPEC+ ministers is scheduled to start at 1330 GMT.
“Amid the hopeful signs, the outlook for the first half of 2021 is very mixed and there are still many downside risks to juggle,” Barkindo said.
“Curbs on social and economic activity remain in place in a number of countries, and there is concern about the emergence of a pernicious new strain of the virus,” Barkindo said.
That strain, reported in Britain last month, is spreading globally and on Monday British Prime Minister Boris Johnson warned that his government would be announcing tougher lockdown rules.
With benchmark Brent oil futures holding above $50 per barrel, OPEC+ took the opportunity this month to raise output by 500,000 barrels per day (bpd) as it looks to eventually undue cuts that currently stand at 7.2 million bpd.
OPEC+ producers have been curbing output to support prices and reduce oversupply since January 2017, and increased their cuts to a record 9.7 million in mid-2020 as COVID-19 hammered demand for gasoline and aviation fuel.
OPEC’s leader Saudi Arabia has suggested a more cautious approach during previous meetings, while United Arab Emirates and non-OPEC member Russia have said they prefer a speedier increase.
“Under the current output terms, surpluses are expected from February until April, before demand recovers from May onwards, so a possible OPEC+ decision to not increase production will keep balances at a manageable level,” said Bjornar Tonhaugen from Rystad Energy.
Brent prices rose above $53 per barrel on Monday, touching multi-month highs on expectations that OPEC+ will hold output steady in February. They later trimmed gains. [O/R]
(Reporting by Alex Lawler in London, Vladimir Soldatkin and Olesya Astakhova in Moscow; writing by Dmitry Zhdannikov; editing by Jan Harvey and Jason Neely)